Bankruptcy Court’s Loss Mitigation Program
In 2009, The United States Bankruptcy Court – Eastern District of New York adopted a Loss Mitigation Program which applies in all individual Chapter 7, 11, and 13 cases.
The Bankruptcy Court’s General Order #543 provides the following:
The term “loss mitigation” is intended to describe the full range of solutions that may avert the loss of a debtor’s property to foreclosure, increased costs to the lender, or both. Loss mitigation commonly consists of the following general types of agreements, or a combination of them: loan modification, loan refinance, forbearance, short sale, or surrender of the property in full satisfaction. The terms of a loss mitigation solution will vary in each case according to the particular needs, interests, and goals of the parties.
Loss Mitigation may be requested by a debtor or creditor. Also, the Bankruptcy Court may enter a Loss Mitigation order at any time after notice to interested parties. However, in our experience, the Debtor’s attorney typically files a motion requesting loss mitigation in an effort to obtain a loan modification for the debtor.
We currently have several clients who are participating in the loss mitigation program. The program has some similarities to foreclosure settlement conferences held in state court, but appears to move along at a much faster pace.
You can click here to watch a video entitled “Loss Mitigation and Mortgage Modification in Bankruptcy Courts.”
Additionally, you can always call the Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620, to speak with an experienced bankruptcy attorney.
Forgiven debt may be taxable by the IRS!
The Second Circuit has ruled that debt collectors don’t need to warn clients of the potential tax liabilities associated when making a settlement offer for less than the full amount owed.
In Isaac Altman v. J.C. Christensen & Associates Inc., docket number 14-2240, the U.S. Court of Appeals for the Second Circuit stated in it’s opinion that the “fact that a debtor may then have to pay tax on the amount saved is simply not deceptive…”
Isaac Altman received a letter from J.C. Christensen & Associates stating that he could save up to 50 percent on his $6,000 debt if he made a payment upfront. Altman alleged the letter was deceptive violated the FDCPA’s prohibition against false, deceptive, or misleading representations. As stated above, the Court was not convinced.
So, you may want to consult your accountant/tax preparer before accepting a debt settlement offer. Additionally, you generally won’t have this tax issue if you file for chapter 7 bankruptcy. Therefore, it may be in your best interest to also consult a bankruptcy attorney.
The Law Firm of Vaughn & Weber, PLLC
393 Jericho Tpke. #208
Mineola, NY 11501
Rent Stabilized Status Lost in Bankruptcy
Will filing bankruptcy cause you to lose your rent-stabilized apartment?
On April 10, 2012, the United States Bankruptcy Court, S.D. New York ruled that a chapter 7 debtor could not exempt the value of her rent stabilized lease (SeeIn re Santiago-Monteverde, 466 B.R. 621 (Bankr. S.D.N.Y. 2012). Unfortunately,0n September 10, 2012, the debtor lost her appeal to the United States District Court, S.D. New York. The District Court affirmed the bankruptcy court’s ruling which rejected the debtor’s argument that the value of her rent-stabilized lease is a qualifying local public assistance benefit under section 282(2) of New York Debtor and Creditor Law.
It appears that the debtor’s chapter 7 case was going rather smoothly until the chapter 7 Trustee received an offer from the Debtor’s landlord to purchase the Trustee’s interest in the Rent-stabilized lease. This set off a chain of events which, for the time being, have resulted in the debtor potentially being forced out of her rent-stabilized apartment.
Thus, until legislation is enacted which allows debtors to safely exempt the value of their rent stabilized lease, bankruptcy practitioners will have to tread carefully when dealing with a debtor who leases a rent-stabilized apartment.
Bankruptcy Attorney in Mineola
If you would like more information regarding the subject of this post or a free consultation with a bankruptcy attorney, call the Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620.
Bankruptcy Trustee Trouble
Choose your bankruptcy battles wisely!
It is not a good idea to fight with your bankruptcy trustee over trivial matters. We have and always will stand up to bankruptcy trustees on behalf of our clients. However, we don’t see the benefit in bickering with a bankruptcy trustee over pay stubs, bank statements, tax returns, etc. You are obligated to provide your bankruptcy trustee with certain documents and comply with particular requests they make. This does not mean every request! Thus, it is in your best interest to know when your bankruptcy trustee is overreaching. A good bankruptcy attorney will know when to comply with a trustee’s requests and when to contest them.
New York Bankruptcy Attorney
As always, the Law Firm of VAUGHN, WEBER & PRAKOPE, PLLC, is here to assist you. We are conveniently located in the heart of Nassau County, Long Island, at 393 Jericho Tpke., #208, in Mineola, NY. Contact us at (516) 858-2620 to arrange a FREE consultation with a bankruptcy attorney.